Financialization, income distribution, and aggregate demand in the USA.

Discussion paper


Onaran, O., Stockhammer, E. and Grafl, L. 2011. Financialization, income distribution, and aggregate demand in the USA. Oxford U. P.. https://doi.org/10.1093/cje/beq045
TypeDiscussion paper
TitleFinancialization, income distribution, and aggregate demand in the USA.
AuthorsOnaran, O., Stockhammer, E. and Grafl, L.
Abstract

This paper investigates the effects of financialization and functional income distribution on aggregate demand in the USA by estimating the effects of the increase in rentier income (dividends and interest payments) and housing and financial wealth on consumption and investment. The redistribution of income in favor of profits suppresses consumption, whereas the increase in the rentier income and wealth has positive effects. A higher rentier income decreases investment. Without the wealth effects, the overall effect of the changes in distribution on aggregate demand would have been negative. Thus a pro-capital income distribution leads to a slightly negative effect on growth, i.e. the USA economy is moderately wage-led.

JournalCambridge Journal of Economics
ISSN0309-166X
PublisherOxford U. P.
Publication dates
PrintJan 2011
Publication process dates
Deposited20 Apr 2010
Output statusPublished
Copyright Statement

Pre-refereed version as permitted by publisher.

Additional information

Originally published as discussion paper no 136 (March 2010) by Middlesex University Business School, Department of Economics and Statistics.

Digital Object Identifier (DOI)https://doi.org/10.1093/cje/beq045
LanguageEnglish
File
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